Open banking jumped onto the financial services scene with a focus on enabling consumer-facing FinTech platforms to connect with their users' bank account data. The model quickly gained traction and today is accelerating its expansion into B2B financial services, too.
This trend was recently highlighted by Laura McGortey, BNY Mellon's director of strategic partnership solutions. Reports in Finextra noted that McGortey spoke of the B2B opportunity in open banking, particularly in the U.S.
"While adoption for consumer accounts is enhanced through regulatory drivers, adoption for business accounts is based on market interest," she stated in her presentation at the Association for Financial Professionals' AFP 2019 event.
In this week's roundup of the latest in open banking initiatives, API connectivity and bank-FinTech collaboration, PYMNTS looks at both the newest services and products by financial service providers that deploy the open banking business model for their business customers, as well as a slew of bank-FinTech collaboration efforts that aim to improve businesses' experience in small business lending, accounting and more.
Open Banking Targets Corporates
Western Union is taking open banking straight to corporates, opening up API connectivity into its domestic and cross-border payment applications to an estimated 37,000 business customers under its Western Union business solutions unit.
The financial institution announced this week the rollout of a set of APIs allowing business clients to integrate their bank accounts, accounting platforms and ERPs with their Western Union GlobalPay accounts to streamline payments processing and boost transparency of the transactions. APIs also boost visibility into foreign exchange rates, Western Union said, while allowing the FI to offer business clients "the latest level of regulated European internet security," it said in its announcement.
Also targeting the corporate directly is InstaReM, which announced this week a rebrand to Nium and a pivot toward becoming an "open money platform."
The company's announcement emphasized its efforts to create "an open platform that businesses and partners can use" to develop their own payment and finance solutions using Nium's Open Money Network. The Nium platform offers open-source software for developers to create new payment capabilities and join its network of financial institutions, FinTechs and other companies, supporting collaboration and product development in the cross-border transaction space.
U.K. accounting FinTech Coconut jumped into open banking with a focus on business services, too, announcing plans to integrate with high-street banks for augmented accounting and bookkeeping. The company said it will allow customers that have a current account or card product with any of 20 major high-street banks, challenger banks or card issuers to connect those accounts into their Coconut platforms to streamline financial data entry for augmented money management.
Though open banking is not a regulatory mandate in the U.S., a new player, Rho, has stepped onto the scene with plans to focus on API connectivity. Rho Technologies is introducing Rho Business Banking, using APIs to integrate with an array of back-office platforms like QuickBooks, Xero and Slack for streamlined data integration and financial analytics.
Additionally, investors gave a show of support for APIs and open banking frameworks targeting business users, with Accel leading a $77 million investment round in Galileo. The company operates a suite of APIs for financial institutions and FinTechs to connect data and power customer-facing products. The investment also signals the spread of the open banking business model beyond markets in which it is a regulatory requirement, with Galileo planning to use the funds to expand across Latin America as well as Europe and the U.K.
Banks, FinTechs Team Up
The latest in bank-FinTech collaborations targeting business financial services showcased the wide array of use cases for the model, from global payments to banking to small business lending.
Bank of America is teaming up with Flywire to enhance its cross-border payments capabilities for education and corporate customers. Together, the companies said they will streamline cross-border billing, payment and accounts receivable, connecting global customers with foreign exchange rate transparency and the ability to remit funds received from abroad via their local payment methods.
Kasisto, meanwhile, announced plans to connect its banking partners to its conversational AI technology with the rollout of KAI Business Banking (KBB). KBB targets corporate and business banks with tools to connect their own business clients to intelligent virtual assistant technology for cash and treasury management capabilities, providing insight into cash positions, account balances and automation of routine tasks like reconciliation and approvals.
BlueVine is launching its own banking solution for business customers, the result of its collaboration with The Bankcorp in a move that showcases the opportunity for FinTechs to launch banking services without having to obtain their own FDIC membership and licenses. BlueVine's offering connects businesses to a checking account and debit service, part of its effort to expand B2B FinServ beyond online loans.
Investors Bancorp has launched a small business loan digitization initiative through a partnership with OnDeck Capital subsidiary ODX, which will connect the bank to its small business loan origination platform. Their collaboration will enable Investors Bancorp to accelerate and digitize the loan application and approval process, as well as to connect to third-party sources of data for enhanced loan underwriting.
Finally, targeting bank partners, online small business lending company Biz2Credit announced a collaboration with Infosys to design a holistic small business lending-as-a-service offering. Infosys will support technology integration of Biz2Credit's Biz2X solution, a SaaS platform designed to enable lenders to digitize and customize their small business lending offerings. It's a partnership that not only spotlights opportunities in bank-FinTech collaboration, but the importance of technology and data integration in ensuring that those collaborations function properly.